JUDGMENT :

1. The Suit is filed for foreclosure of an English Mortgage also seeks the following reliefs: a) Money decree for Rs. 44,05,62,418/- with interest @ 21% p.a. (compound interest with quarterly rest as per the Loan Agreement) from the date of filing of the Suit till payment or realization together with additional interest as provided in the Loan Agreement until the realization thereof. b) In the event of failure to pay the aforesaid decreital amount, decree for enforcing the mortgage and for that purpose, all necessary orders and directions including foreclosing Defendant No. 1's equity of redemption and ordering sale of the mortgaged property. c) In the event the attachment of the mortgaged property under MPID Act is vacated either by the Competent Authority or the Court, declaration that the Plaintiff would be entitled to sell the mortgaged property without intervention of the Court.

2. By an Interim Application (L) No. 27265 of 2024 filed on 30th August 2024, the Defendants seeks a preliminary decree under Order XXXIV of the CPC, contending that the suit is a redemption action concerning the mortgaged property. The Defendants admit the Loan Agreement and their obligation as a Guarantors under the Deed of Guarantee dated 22nd March 2012.

3. By an Interim Application No.5998 of 2025 filed on 30th September 2024, the Plaintiff seek a decree on admission considering the admissions made by the Defendants in Interim Application (L) No. 27265 of 2024.

4. The issues that arise for determination are as under:

i. Whether interest after capitalization partakes the character of principal; and

ii. Whether the Court should exercise its discretion to reduce the contractual rate of interest;

Issue (I) Whether interest after capitalization partakes the character of principal

5. Mr. Setalvad, learned Senior Counsel appearing for the Applicants/Org. Defendants, in support of the Interim Application seeking a preliminary decree, submits that the Defendants' principal grievance concerns the levy of contractual interest at the rate of 21% per annum with quarterly rests, payable in advance, together with an additional interest of 2% per month on arrears.

6. He submits that the Applicants are willing to pay the entire suit claim of Rs. 44,05,62,418/- together with interest at the contractual rate of 21% per annum with quarterly rests from the date of filing of the suit. However, he seeks a waiver of pendente lite interest and all other ancillary charges, or in the alternative, a reduction of interest to a nominal banking rate.

7. He submits that the original loan advanced to Birla Power Solutions Ltd. ("BPSL") was in the principal sum of Rs.21 crores, carrying interest at 21% per annum with quarterly rests under the Loan Agreement dated 22nd March 2012. On account of non-payment of interest, the loan attracted further interest at the rate of 2% per month. According to him, BPSL paid an aggregate amount of Rs.12,63,24,478/- during the period between 31st March 2012 to 30th September 2014. Notwithstanding the aforesaid payments, the Defendants express their willingness to pay the entire sum of Rs.44,05,62,418/-, together with interest on the principal sum of Rs.21 crores at such rate as this Court may determine.

8. Mr. Setalvad submits that the present suit is governed by the provisions of Order XXXIV of the (CPC). He contends that Order XXXIV Rule 7 pertains to the passing of a preliminary decree in a suit for redemption. Under Rule 7(1)(a)(1), the Court is required to direct that accounts be taken of what was due to the Plaintiff at the date of such decree in respect of "principal and interest on the mortgage". Under Rule 7(1)(b), the Court is required to declare the amount so found due as on the date of the preliminary decree.

9. Placing reliance upon the decision in Union Bank of India v. Dalpat Gaurishankar Upadyay,, (AIR 1992 Bom 482) he submits that Rule 7 does not envisage merger of interest into principal or the determination of a